LPL Financial Holdings Inc., the largest U.S. independent broker-dealer, said Tuesday it is suspending sales of products sponsored by the embattled alternative-investing enterprise controlled by Nicholas Schorsch.
The broker-dealer, with nearly 14,000 advisers, said it would no longer sell products by American Realty Capital Properties Inc. and RCS Capital Corporation “and their respective affiliates.”
The announcement is the latest — and biggest — blow by far to Mr. Schorsch's firms.
Mr. Schorsch
faces withering scrutiny after news broke last Wednesday that the traded REIT he controls, American Realty Capital Properties Inc., had made a $23 million accounting error that resulted in the firing of its chief financial officer.
Even before the loss of LPL, Mr. Schorsch lost access to almost 11,700 registered reps at AIG Advisor Group, Securities America Inc. and National Planning Holding Inc. who potentially would sell his products.
With the loss of access to AIG Advisor Group and LPL reps, Mr. Schorsch has so far said good-bye for now to almost 25,610 registered reps and advisers who potentially would sell his products. That accounts for roughly 16% of the registered reps who are counted as advisers at independent-contractor broker-dealers.
The two real estate investment trust backers are
embroiled in a dispute over whether RCS Capital Corp., known by its ticker RCAP, can end its agreement to buy two REIT managers and advisers from American Realty Capital Properties, known as ARCP, since the Oct. 29 disclosure of the accounting irregularities.
A spokesman for ARCP, Andy Merrill, did not respond to a request for comment. Nor did a spokesman for RCAP, Josh Baldwin.
Mr. Schorsch is the executive chairman of RCAP, which is the wholesaling broker-dealer for REITs, selling and distributing them through hundreds of independent broker-dealers. Mr. Schorsch in the past year has also acquired retail broker-dealers and now has close to 10,000 registered reps and advisers under RCAP.
Mr. Schorsch is also chairman of ARCP, a large publicly traded REIT that focuses on net lease properties. He was CEO until October 1.
